In this project, a fast accurate global pairwise alignment of noncoding DNA sequences, MCALIGN2, is developed based on explicit models of indel evolution. A pair-hidden-Markov-Model (pair-HMM) of seven states and a golden-Section-Search algorithm are employed in this method to search for the most probable alignment between two homologous sequences. This method is then used to align and analyze noncoding DNA sequences in Drosophila. Comparative genomic analysis in this project shows that INE-1 elements, one of the most abundant TEs in Drosophila, along with sites within short introns and fourfold degenerate sites are the fastest evolving nucleotides in the genomes of Drosophila melanogaster, D. simulans and D. sechellia. Fourfold sites tend to be evolving (relatively) slightly more slowly than the other two classes of nucleotides, probably due to selection acting on protein translation efficiency. The observed substitution rate in these fastest evolving sites appears to be strongly influenced by the recombinational environment in which they are located. This rate may be influenced by several factors including ancestral polymorphisms, variation in mutation rate, natural selection and random genetic drift. The relative importance of these factors varies depending on the time since speciation. This project also fully investigates the distribution and rate of evolution of three major TE classes (LTR, non-LTR retrotransposons and DNA transposons) in the Drosophila euchromatic genomeusing a gene-centric approach. The study demonstrates that LTR elements outnumber non-LTR and DNA elements in all intergenic, intronic and exonic regions, and LTR elements also show relatively lower mean divergences than the other two classes between D. melanogaster and D. yakuba. The findings suggest that some TEs, rather than being “junk” and “selfish”, may be conserved between species, and therefore, play vital roles in gene regulation and host genome evolution.